The City of Los Angeles is giving the Google cloud a major endorsement with a $7.25 million, five-year deal in which the city will use Google’s Gmail and other office applications.

Google is claiming this as a major win for its enterprise cloud division. Perhaps best of all for Sergey and Larry, however, is that more than $1.5 million of the payments come indirectly from archrival Microsoft.

“According to Los Angeles City Council minutes, just over $1.5 million for the project will come from the payout of a 2006 class action lawsuit between the city and Microsoft,” the IDG News Service reports. “Microsoft paid $70 million three years ago to settle the suit, brought on behalf of six California counties and cities who alleged that Microsoft used its monopoly position to overcharge for software. Microsoft has paid out more than $1 billion in other class-action settlements based on similar claims.”

So there you go. Microsoft is helping the Los Angeles government pay off a multimillion dollar contract with Google. But the deal is significant for other reasons.

Los Angeles, obviously, is a major city with serious IT needs. Governments have to follow strict regulatory requirements, and Google has been trying to prove that it can meet those demands. This deal could give Google some nice momentum in convincing businesses that its cloud-based services are ready to provide enterprise-class security and performance. The fact that Google gets to stick it to Microsoft at the same time just makes it all the sweeter.